UPMSP Vocational Accountancy & Auditing study materials
UPMSP Vocational Accountancy & Auditing study resources

UPMSP Vocational Accountancy & Auditing: Audit Evidence, Procedure and Documentation

UPMSP Vocational Accountancy & Auditing · Work through your exam, one topic at a time.

All guide sections

Audit Evidence, Procedure and Documentation

What this domain tests

This domain tests how auditors obtain and evaluate evidence, the reliability hierarchy of evidence, the audit programme, working papers and the requirements of the Standards on Auditing.

Core rules

  • Evidence must be sufficient (quantity) and appropriate (relevance and reliability).
  • Procedures: inspection of records and assets, observation, external confirmation, recalculation, re-performance, inquiry and analytical procedures. Inquiry alone is never sufficient evidence.
  • Reliability: external evidence is better than internal; original documents better than photocopies; written evidence better than oral; the auditor's own computation better than a management representation.
  • Materiality (SA 320) and audit risk (SA 315, SA 330) determine the nature, timing and extent of procedures; SA 530 governs sampling.
  • Working papers: a permanent file (memorandum and articles, title deeds, long-term agreements) and a current file (trial balance, schedules, confirmations, conclusions).
  • SA 230 requires documentation that records the procedures performed, who performed and reviewed them, when, and the conclusions drawn, retained for at least seven years from the date of the auditor's report.

Worked example

Verifying a bank balance of ₹42,00,000: the client's cash book bank column is internal evidence only; a bank statement printed by the client is also internal in origin; a direct written confirmation from the bank, requested by the auditor, is the most reliable. The auditor should reconcile the balance with the statement and test reconciling items. If no confirmation is received, alternative procedures such as inspecting statements and testing subsequent receipts must be performed and documented; an unresolved limitation may lead to a modified opinion.

Traps

Accepting a management representation letter as sufficient for a material item; calling evidence 'sufficient' without judging its reliability; discarding working papers once the report is signed; treating analytical procedures as a substitute for testing unusual transactions.